Delaware Flood Insurance: New Federal Flood Insurance Risk Rating 2.0

The Federal Emergency Management Agency (FEMA) is rolling out changes when it comes to flood insurance rates across all states in the country. Today, we will unpack these changes coming to Delaware and how they can impact your flood insurance in the future.

Today, we're taking a trip to another state in the coastal area, the Blue Hen state of Delaware. Considering how there's a lot of talk about how flooding can devastate the state as well as the threats of flooding that this hurricane season will bring, we want you to join us in preparing for this type of disaster.

Let's jump into the good, the bad, and the ugly changes that FEMA's National Flood Insurance (NFIP) Risk Rating 2.0 or also known simply as NFIP 2.0 when it comes to flood insurance purchase and rates.

The NFIP 2.0

The Risk Rating 2.0, or commonly known as NFIP 2.0 as well, is more of a move of equity. This update on the federal flood insurance program itself will allow you to no longer pay more than your fair share when it comes to premiums as flood insurance premiums would now be based on the value of your property or home starting this October 1st. 

It's important to note that a lot of participating communities will be impacted with this new rating system and policyholders in the National Flood Insurance Program will have to adopt these new ratings in time. Considering that this will impact not just flood insurance policies, flood insurance coverage, but also cost of flood insurance itself, it's important to be ready for any possible impacts this may cause you in the future.

When it comes to the rate changes happening across the country, you're going to see these colors in ranges which are the green, blue, pink, and grey range bars. Now, each of these colors represents the good, the bad, and the ugly changes coming to each state.

Now, let's talk about how these colors will change federal flood insurance in Delaware once this update kicks in.

The Good

First things first, let's talk about the good changes coming with this Risk Rating 2.0 which is showed by the green range bar you see in these reports. This is what we call a good change because it will decrease your flood insurance rates per month by more than $100 ($1200 per year).

This change is expected to impact 38% or 9,847 policies come October. Considering that Delaware averages at about $750 in NFIP premiums, this change will really help you save a lot by the time the NFIP 2.0 kicks in.

This can be very helpful for higher-valued homes since they're the ones with the possible higher premiums with the National Flood Insurance Program. For those with what is considered lower-valued homes can really find better protection for their properties with this new update on flood insurance rate with FEMA.

The Bad

Now, let's move into the bad change which takes up most of the changes coming to Delaware. This is presented through that light blue bar and 52% or 13,531 of FEMA policies will be experiencing an increase in flood insurance rates.

Policyholders can also maximize the perks that come with being one of the communities that participate with the NFIP. This can come in form of subsidized rates through the Community Rating System (CRS) which can help lower these rates despite having some increase. There's also the ICC or Increased Cost of Compliance where the federal government itself will help you finding a methodology when it comes to better mitigation efforts in reducing, if not preventing flood damage on your property.

The increase will start at $0 and maxes to $10 per month ($0 - $120 per year) for these properties. This means that starting October, you're going to start paying $870 on average for your federal flood insurance premiums.

The Ugly

Lastly, let's cover the last two colors we have from Risk Rating 2.0: the dark blue, the ugly change, and the grey range, the uglier change.

Now, both of these would fall under what we'd like to call the ugly change because it's going to bring an increase in rates once the update kicks in, and it's going to be a drastic change when it comes to flood insurance.

The pink range is composed of 8% or 2,190 FEMA policies in Delaware. This is still an ugly change since the increase will now range from $10 minimum to $20 maximum per month ($120 - $240 per year). This means that if you're already paying for the average premium from FEMA right now, it's going to reach that $940 to $1000 mark easily.

This can be very difficult to manage especially for houses that sit close to a water source like rivers, creeks, and lakes. Households will have to either move into the private flood insurance or reallot their budget to accommodate these new rates.

The grey range is an even uglier change especially for the 2% or 581 FEMA flood insurance policyholders since the increase will start at $20 per month ($240 per year). This change significantly blows your premiums out of the water since the average for your flood insurance will start at $940 at the lowest. 

A full graph of these changes can be seen below:

When Will It Happen?

Now, the date when you can adopt this program really depends if you're doing a renewal or if it's a new business policy. You see, you can expect these changes to start on October 1st and you're going to adapt to these rate changes if you're buying flood insurance from FEMA on or after that date. 

On the other hand, if you're doing a renewal with FEMA after that date then you don't have to take in these new rate changes until April 1st, 2022.

We've been talking about this since last year since basically the NFIP is already 30 years old already and is in need of this change. If you have questions on these upcoming changes, what are your flood insurance options in Delaware, or anything about flood, reach out to us through the links below. You can also watch this on our YouTube channel.

Remember, we have an educational background in flood mitigation and we want to help you understand flood risks through education and awareness in flood insurance and preparedness.